Why buying a car got so expensive
The rising cost of new vehicles has effectively shut out up to 1 million Americans from the market. Factors contributing to this trend include high labor costs, government policies, and a shift in consumer preferences towards larger vehicles. As a result, the average price of new cars has surged, making them unaffordable for many lower-income households.
- ▪The average cost of a new vehicle is around $50,000, up roughly 20% from four years ago.
- ▪Used car prices are also near record highs, averaging about $32,000 for a three-year-old vehicle.
- ▪Federal regulations and high labor costs have pushed automakers to focus on larger, more profitable vehicles.
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Today, up to 1 million Americans are effectively shut out of the market for new cars and light trucks. Vehicles have simply become too expensive for many lower-income households. The average cost of a new vehicle is around $50,000, up roughly 20% from just four years ago. To compound things, used car prices are also near record highs, averaging about $32,000 for a three-year-old vehicle. What’s going on? The long-term decline in vehicle affordability is the result of poor government policy, costly union contracts, macroeconomic pressures, and changing consumer preferences.
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